JB Hi-Fi's management is finalising a performance strategy for its New Zealand discount electronics chain after it turned to a loss as sales and margins dropped in the latest financial year.
The New Zealand division posted a $2.7 million loss on an earnings before interest and tax basis in the 12 months ended June 30, from a $1m ebit profit in 2016, the Melbourne-based company said in a statement to the ASX, where its stock is listed.
JB Hi-Fi has taken a A$15.8m (NZ$17.1m) non-cash impairment on the business "following poor performance in the year", and says it has completed a review of the business and is working on a two-year strategy to improve performance.
Sales fell 0.3 per cent to $234m, though the year-earlier period was boosted by "market-wide demand for third-party prepaid content cards" in the wake of Dick Smith Electronics' liquidation. Gross margins dropped 26 basis points to 18.15 per cent, while the cost of doing business increased 156 basis points to 17.89 per cent.
The New Zealand arm has 16 stores, making it a small player for the wider group's network of 302 stores. Net profit for the group rose 13 per cent to A$172.4m on a 42 per cent increase in sales to A$5.63 billion, ahead of its forecast of $5.58b.
The local division's margins lagged behind the larger Australian division business with gross margins of 22.24 per cent and a cost of doing business ratio of 14.96 per cent.
The board declared a final dividend of 46 Australian cents per share, payable on September 8, meaning a total payout of A$1.18 for the year compared to A$1 in 2016. The ASX-listed shares last traded at A$25.37 and have dropped 9.5 per cent this year.